Company Context
MealKitCo is a direct-to-consumer meal kit subscription company operating in the U.S. It generated $180M in revenue last year, serves 420,000 active subscribers, and is the #4 player in a category led by two scaled national competitors. The company has built a strong brand among urban professionals, but growth has slowed and profitability remains inconsistent.
Strategic Situation
You are the incoming Head of Strategy. The CEO has asked you to identify the best opportunities to improve the business over the next 12-18 months. The leadership team is debating whether the biggest opportunity is to fix retention, expand into new customer segments, launch adjacent products, or improve pricing and unit economics. The board wants a clear, prioritized recommendation backed by data.
Key Data Points
| Metric | Current | Notes |
|---|
| Annual revenue | $180M | Up 6% YoY, vs. 18% category growth two years ago |
| Active subscribers | 420,000 | Average monthly churn: 5.8% |
| Average order value | $72 | 4.1 orders per subscriber per month |
| Gross margin | 28% | Down from 31% last year due to fulfillment and discounting |
| CAC | $118 | Payback period: 8 months |
Additional Facts
- Market size for U.S. meal kits is estimated at $7.5B, growing 9% annually.
- MealKitCo's share is approximately 2.4% of the total market.
- Two largest competitors hold 32% and 24% market share and have broader family-oriented offerings.
- Internal survey data shows 34% of churned users cite price, 27% cite menu fatigue, and 18% cite delivery inflexibility as the primary reason for canceling.
- A pilot add-on category (ready-to-eat lunches) in one region increased average revenue per user by 11%, but reduced fulfillment margin by 2 percentage points in that region.
Deliverables
Please assess the business and recommend where MealKitCo should focus to improve performance.
- Diagnose the most important drivers limiting growth and profitability.
- Identify and size the most attractive improvement opportunities.
- Prioritize 2-3 strategic initiatives for the next 12-18 months.
- Recommend how the company should go to market for the top initiative(s).
- Define the key metrics management should track.
Constraints
- Management can fund only $15M of incremental investment this year.
- The company must improve EBITDA margin by at least 3 percentage points within 18 months.
- Operations leadership can support only one major fulfillment change and one major product launch in the next 12 months.
- The board expects a recommendation that can begin showing measurable results within two quarters.
